Correlation Between BB Seguridade and American International

Can any of the company-specific risk be diversified away by investing in both BB Seguridade and American International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BB Seguridade and American International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BB Seguridade Participacoes and American International Group, you can compare the effects of market volatilities on BB Seguridade and American International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BB Seguridade with a short position of American International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Seguridade and American International.

Diversification Opportunities for BB Seguridade and American International

-0.47

Correlation Coefficient

BB Seguridade  American International

Very good diversification

The 3 months correlation between BBSEY and American is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes and American International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American International and BB Seguridade is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BB Seguridade Participacoes are associated (or correlated) with American International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American International has no effect on the direction of BB Seguridade i.e., BB Seguridade and American International go up and down completely randomly.

Pair Corralation between BB Seguridade and American International

Assuming the 90 days horizon BB Seguridade Participacoes is expected to generate 2.57 times more return on investment than American International. However, BB Seguridade is 2.57 times more volatile than American International Group. It trades about 0.04 of its potential returns per unit of risk. American International Group is currently generating about -0.15 per unit of risk. If you would invest  570.00  in BB Seguridade Participacoes on September 22, 2024 and sell it today you would earn a total of  11.00  from holding BB Seguridade Participacoes or generate 1.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BB Seguridade Participacoes  vs.  American International Group

BB Seguridade Partic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BB Seguridade Participacoes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

American International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American International Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, American International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BB Seguridade and American International

The main advantage of trading using opposite BB Seguridade and American International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Seguridade position performs unexpectedly, American International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in American International will offset losses from the drop in American International's long position.

The idea behind BB Seguridade Participacoes and American International Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.